When Salesforce purchased Slack earlier this week for $27.7 billion, it was in some methods the tip of a startup fairytale. Slack was the dwelling embodiment of the Silicon Valley startup success fantasy. It started as a pivot from a sport firm, of all issues. It raised $1.4 billion, went from zero to a $7 billion valuation to IPO, checking off each field on the startup founder’s want checklist.
Whereas we’d not ever know the again (Slack) room maneuvering that went on to make the deal a actuality, it’s fascinating to notice that Slack CEO Stewart Butterfield advised me in an interview this week that he was not truly making an attempt to promote the corporate when he approached Salesforce president and COO Bret Taylor earlier this yr. As a substitute, he wished to purchase one thing from them.
“I truly talked to Bret within the early days of the pandemic to see in the event that they wished to promote us Quip as a result of I assumed it could be good for us, and I didn’t actually know what their plans had been [for it]. He mentioned he’d get again to me, after which obtained again to me six months later or so,” Butterfield mentioned.
At that time, the dialog flipped and the businesses started a sequence of discussions that finally led to Salesforce buying Slack.
Massive cash, large expectations
From the Salesforce perspective, Taylor says that the Slack deal was well worth the cash as a result of it actually permits his firm to carry collectively all of the items of their platform, one which has expanded through the years from pure CRM to incorporate advertising, customer support, knowledge visualization, workflow and extra. Taylor additionally mentioned that having Slack provides Salesforce a lacking communication layer on prime of its different merchandise, one thing particularly necessary when interactions with clients, companions or fellow workers, have grow to be largely digital.
“After we say we actually need Slack to be this subsequent technology interface for Buyer 360, what we imply is we’re pulling collectively all these techniques. How do you rally your groups round these techniques on this digital work-anywhere world that we’re in proper now the place these groups are distributed and collaboration is extra necessary than ever,” Taylor mentioned.
Butterfield sees a pure connection between what individuals do in the middle of their work, what machines do behind the scenes in these techniques of file and engagement, and the way Slack will help bridge the hole between people and machines.
He says that by placing Slack in the midst of enterprise processes, you possibly can start to eradicate friction that happens in advanced enterprise software program like Salesforce. As a substitute of shifting stuff via e-mail, clicking a hyperlink, opening a browser, signing in, after which lastly accessing the device you need, the approval may very well be constructed right into a single Slack message.
“When you’ve got a whole lot of these sorts of actions a day, there’s an actual alternative to extend the speed and that has an influence, and never simply within the minutes saved by the individual doing the approval, however the pace of how the entire enterprise operates,” Butterfield mentioned.
Competing with Microsoft
Whereas neither government mentioned the deal was about competing with Microsoft, it was doubtless an underlying purpose that the businesses determined to affix forces. They could show higher collectively than they’re individually, and each have sophisticated histories with Microsoft.
Slack has had an ongoing battle with Microsoft and its Groups product for years. It filed suit against the company final summer season within the EU over what it referred to as unfairly bundling of Groups without spending a dime with Workplace 365. In an interview final yr with the Wall Avenue Journal, Butterfield mentioned that he believes Microsoft sees his firm as an existential threat. Hyperbole apart, there may be stress and competitors between the 2 enterprise software program firms.
Salesforce and Microsoft even have a protracted historical past from lawsuits in the early days, to creating mates and dealing collectively when it is smart after Satya Nadella took over in 2014, whereas nonetheless competing onerous available in the market. It’s onerous to not see the deal in that context.
In a recent interview with TechCrunch, Battery Ventures normal companion Neeraj Agrawal mentioned the deal was not less than partially about catching Microsoft.
“To get to a market cap of $1 trillion, Salesforce now has to take MSFT head on. Till now, the corporate has largely been in a position to keep in its personal swim lane by way of merchandise,” Agrawal advised TechCrunch.
As for Butterfield, whereas he noticed the plain competitors, he denied the deal was about placing his firm in a greater place to compete along with his rival.
“I don’t suppose that was actually an necessary a part of the rationale, not less than for me,” he mentioned, including “the competitors with Microsoft is overblown. The problem for us was the narrative. They’re simply good PR or one thing that I couldn’t determine,” he mentioned.
Whereas Butterfield cited an inventory of enormous shoppers in enterprise tech, insurance coverage and banking, the narrative has at all times been that Slack was favored by developer groups, which is the place it initially gained traction. Regardless of the actuality, with Salesforce, Slack is certainly in a greater place to compete with any and all comers within the enterprise communications area, and whereas will probably be a part of Salesforce, the 2 firms even have to determine how one can preserve some separation.
Conserving Slack unbiased
Taylor actually acknowledges that Slack’s present clients are watching carefully to see how they deal with the acquisition, and his firm should stroll a advantageous line between respecting the model and product independence on one hand, whereas discovering methods to create and construct upon current hooks into Salesforce to permit the CRM big to take full benefit of its substantial funding.
It gained’t be straightforward to do, however you possibly can see an analogous stage of independence in a few of Salesforce’s latest big-money purchases like MuleSoft, the corporate it bought in 2018 for $6.5 billion, and Tableau, the corporate it purchased final yr for over $15 billion. As Butterfield factors out, these two firms have clearly maintained their model identification and independence, and he sees them as position fashions for Slack.
“So there’s a layer of independence that’s like that [for Mulesoft and Tableau] as a result of it’s not going to assist anybody name us Chat Cloud or one thing like that. They paid some huge cash for us, so they need us to do extra of what we had been already doing,” he mentioned.
Taylor, whose opinion issues significantly right here, actually sees it in comparable phrases.
“We wish to make sure that we now have an actual built-in worth proposition, an actual built-in platform for builders, but in addition preserve Slack’s expertise independence, expertise agnostic platform and its model,” he mentioned.
As for the businesses coming collectively, each males see a variety of potential right here to merge Slack communications with Salesforce’s enterprise software program prowess to make one thing higher, and Taylor sees Slack serving to hyperlink the 2 with workflows and automations.
“When you concentrate on automation, it’s occasion pushed, these lengthy operating processes, automations. Should you take a look at what persons are doing with the Slack platform, it’s basically incorporating workflows and bots and all these items. The mix of the Salesforce platform the place I feel we now have one of the best automation intelligence capabilities with the Slack platform is unimaginable,” Taylor mentioned.
The problem these two males now face as they transfer ahead with this acquisition, and the entire expectations inherent in a deal this huge, is making it work. Salesforce has a variety of expertise with giant acquisitions, they usually have dealt with some nicely, and a few not so nicely. It’s going to be crucial for each firms that they get this proper. It’s now as much as Taylor and Butterfield to guarantee that occurs.